Human T-cell lymphotropic virus type I (HTLV-I) encodes a 40-kD nuclear trans-activating phosphoprotein, Tax1. The analysis of Tax1 mutants demonstrates that deletion of amino acids 2 through 59 of Taxl (delta 58 Taxl) decreased transactivation of the HTLV-I long terminal repeat 10- to 20-fold. Sl nuclease analysis revealed that the decrease in transactivation of the HTLV-I long terminal repeat was associated with a lack of RNA synthesis. In contrast to the nuclear localization of the wild-type Taxl protein, indirect immunofluorescence analysis demonstrated that delta 58 Taxl failed to localize to the nucleus, indicating that the Taxl nuclear localization sequence is present in amino acids 2 through 59. Cotransfection of wild-type and mutant Taxl DNAs resulted in the cytoplasmic accumulation of Taxl and a 25-fold decrease in transactivation. Although several possibilities which may account for this transdominant effect exist, we favor a model in which delta 58 Taxl interferes with the nuclear localization of wild-type Taxl protein, perhaps by forming heterodimer complexes. The c-ets-I proto-oncogene and the related c-ets-2 gene encode related nuclear chromatin-associated proteins which bind DNA in . To investigate the possibility that Etsl and Ets2 are transcriptional activators, we analyzed the ability of these proteins to transactivate promoter/enhancer sequences in transient co-transfection experiments. The HTLV-I LTR was found to be transactivated by both Etsl and Ets2. An ets-responsive sequence between positions -117 and -160 of the LTR was identified by analyses of a series of 5' deletion mutants of the HTLV-I LTR and of dimerized versions of specific motifs of the LTR enhancer region. Etsl was found to bind specifically to the -117 to -160 regulatory sequence. These results show that Etsl and Ets2 are sequence-specific transcrip- tional activators. In view of the high level expression of Etsl in lymphoid cells, Etsl could be part of the transcription complex which mediates the response to Taxl and the control of HTLV-I replication.